The Rio de Janeiro-based company plans to submit bids to
build some of the 21 rigs to be contracted this year by Sete
Brasil, a joint venture between Petrobras and state-run pension
funds, Chief Financial Officer Roberto Monteiro said yesterday
in a telephone interview. OSX currently only has orders from OGX
Petroleo & Gas Participacoes SA, also owned by Batista.

OSX received a license last week allowing it to build a
shipyard in Rio de Janeiro state and will start clearing land in
coming days, Monteiro said. Petrobras approved the construction
of seven deep-water rigs in February for $4.64 billion, or $662
million each, as part of a program to add 28 rigs to its fleet.

“By getting the license now we are able to start
construction in the next few days,” Monteiro said from Rio de
Janeiro. “Now we are moving full steam ahead.”

OSX plans to finalize an $850 million project finance loan
for its second offshore platform in one to two months, he said.
OSX is seeking a better rate than the 4.25 percent over Libor
that it paid for a similar 8 ½ year loan last year, he said.

Brazil’s oil and gas industry needs $400 billion in goods
and services through 2020 for production and refining projects,
according to the ONIP industry group.

$30 Billion

OSX expects to supply $30 billion worth of equipment to
OGX, also based in Rio de Janeiro. OGX, which expects first
production in October, plans 1.38 million barrels a day of
output by 2019 and will receive its first platform from OGX in
late August. OSX has about $4.8 billion in existing orders from
OGX, Monteiro said.

OSX sees total demand for rigs and platforms in Brazil at
about $200 billion over the next 15 years. Petrobras is doubling
its deep-water fleet to tackle projects in the Atlantic Ocean,
including the 6.5-billion-barrel Lula field, the largest
discovery in the Americas in over three decades.

Brazilian laws require Petrobras, OGX and other oil
companies to buy a majority of goods and services from Brazilian
suppliers, benefitting local shipyards including OSX. Still,
Brazil doesn’t have enough existing shipyards to supply
equipment demand, according to Monteiro.

“It’s challenging to build a unit at international prices
and meanwhile build a yard,” he said. “We have our own
profitability standards that we would like to meet.”

OSX fell 2.65 reais, or 0.6 percent, to 432.35 reais at
2:09 p.m. New York time. The company has fallen 10 percent this
year.

Link to Company News:{OSXB3 BZ <Equity> CN <GO>}

To contact the reporter on this story:
Peter Millard in Rio de Janeiro at +55-21-2125-2531 or
Pmillard1@bloomberg.net